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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Apex Global Management Ltd & Anor v FI Call Ltd & Ors [2014] EWHC 779 (Ch) (19 March 2014) URL: https://www.bailii.org/ew/cases/EWHC/Ch/2014/779.html Cite as: [2014] EWHC 779 (Ch) |
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CHANCERY DIVISION
COMPANIES COURT
IN THE MATTER OF FI CALL LIMITED
AND IN THE MATTER OF THE COMPANIES ACT 2006
7 Rolls Buildings, Fetter Lane London, EC4A 1NL |
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B e f o r e :
____________________
APEX GLOBAL MANAGEMENT LIMITED FAISAL ABDEL HAFIZ ALMHAIRAT |
Claimants/ Petitioners |
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- and - |
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FI CALL LIMITED GLOBAL TORCH LIMITED HRH PRINCE ABDULAZIZ BIN MISHAL BIN ABDULAZIZ AL SAUD EMAD MAHMOUD AHMED ABU-AYSHIH HRH PRINCE MISHAL BIN ABDULAZIZ AL SAUD |
Defendants/ Respondents |
____________________
Mr Daniel Lightman and Miss Emma Hargreaves (instructed by HowardKennedyFsi LLP) for the Claimants/Petitioners
Hearing dates: 12 and 13 February 2014
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Crown Copyright ©
Mr Justice Newey :
Some procedural history
The present applications
CPR Part 25
"(a) the claimant is-
(i) resident out of the jurisdiction; but
(ii) not resident in a Brussels Contracting State, a State bound by the Lugano Convention or a Regulation State, as defined in section 1(3) of the Civil Jurisdiction and Judgments Act 1982;
…
(c) the claimant is a company or other body (whether incorporated inside or outside Great Britain) and there is reason to believe that it will be unable to pay the defendant's costs if ordered to do so;
(d) the claimant has changed his address since the claim was commenced with a view to evading the consequences of the litigation;
…
(g) the claimant has taken steps in relation to his assets that would make it difficult to enforce an order for costs against him."
Application of the conditions in the present case
"(1) the claimant must have 'taken steps'; (2) the steps must have been taken in relation to his assets; (3) the steps must be steps which would make it difficult to enforce an order for costs against him."
A defendant "is not required to show that the steps were taken with the specific intention of defeating enforcement (Aoun v Bahri [2002] EWHC 29 (Comm); [2002] 3 All E.R. 182) or that those steps were taken during the litigation or in contemplation of it (Harris v Wallis, [2006] EWHC 630 (Ch); The Times, May 12, 2006)" (see the White Book, at paragraph 25.13.18).
Discretion
i) Mr Almhairat is no more than a nominal petitioner/claimant and so should not be required to provide security unless (which is not suggested) one of conditions listed in CPR 25.14(2) would be met; and
ii) The existence of cross-claims makes it inappropriate to make an order for security against either of the Apex Parties.
Mr Almhairat as a petitioner/claimant
"(a) has assigned the right to the claim to the claimant with a view to avoiding the possibility of a costs order being made against him; or
(b) has contributed or agreed to contribute to the claimant's costs in return for a share of any money or property which the claimant may recover in the proceedings; and
is a person against whom a costs order may be made."
The significance of the cross-claims
The parties' positions
"The primary position of the Apex Parties is that, as a matter of principle, it would be wrong for any party to be given security for costs in this situation and on that basis alone both [the Global Parties' application and that of the Apex Parties] should be dismissed. This is because these proceedings consist of two unfair prejudice petitions, one of which is effectively a cross-petition against the other arising out of the same facts and seeking much the same relief; in those circumstances neither side should be required to give security to the other, otherwise they would in effect be giving security for the costs of the other side's claim."
The legal framework
"It is … necessary, as I think, to consider what the effect of an order for security in this case would be if security were not given. It would have the effect, as the defendants acknowledge, of preventing the plaintiffs pursuing their claim. It would, however, leave the defendants free to pursue their counterclaim. The plaintiffs could then defend themselves against the counterclaim although their own claim was stayed. It seems quite clear and, indeed, was not I think in controversy–that in the course of defending the counterclaim all the same matters would be canvassed as would be canvassed if the plaintiffs were to pursue their claim, but on that basis they would defend the claim and advance their own in a somewhat hobbled manner, and would be conducting the litigation (to change the metaphor) with one hand tied behind their back. I have to say that that does not appeal to me on the facts of this case as a just or attractive way to oblige a party to conduct its litigation.
Mr Phillips for the defendants submits there would really be no problem because, if the defendants failed in their counterclaim and the plaintiffs' case contrary to the counterclaim effectively succeeded, then the stay could be lifted and the plaintiffs could be given judgment. But on that assumption one is bound to ask what would be the point of making the order at all except to give the defendants a tactical advantage in the litigation."
"It may in some cases be fair and just to make such an order even though the defendant is himself counterclaiming, but I am persuaded that it would be wrong to do so here because the costs that these defendants are incurring to defend themselves may equally, and perhaps preferably, be regarded as costs necessary to prosecute their counterclaim…. The fact that the plaintiffs are plaintiffs and the defendants are counterclaiming defendants instead of the other way round appears on the facts here to be very largely a matter of chance."
"if the money is not paid into court and the plaintiff's claim is therefore stayed, the defendant will still raise issues on the counterclaim which are precisely the same as the issues which he would raise on the claim."
"the question may arise, as a matter of substance, not formality or pleading: is the defendant simply defending himself, or is he going beyond mere self-defence and launching a cross-claim with an independent vitality of its own?"
(to quote from Bingham LJ's judgment in Hutchison Telephone (UK) Ltd v Ultimate Response Ltd [1993] BCLC 307). If a claim raises issues that do not arise from a cross-claim, it may be appropriate to limit any award in respect of the claim to costs relating to the extra issues. In Dumrul v Standard Chartered Bank [2010] EWHC 2625 (Comm), [2010] 2 CLC 661, Hamblen J observed:
"Where the claim raises substantial factual inquiries which are not the subject of the counterclaim, an order for security may be appropriate notwithstanding the fact that the claim provides a defence to the counterclaim…. In those circumstances, an order for security will normally be limited to the costs of addressing additional issues raised only by the claim."
"In my judgment where, as in this case, both parties carry on business outside the jurisdiction, both are claiming against the other as parties who have been badly treated and have suffered damage, and it was mere chance that one started the arbitration before the other could get in a claim, then both should be treated alike. If one gets an order for security for costs then the other should too."
In Autoweld Systems Ltd v Kito Enterprises LLC [2010] EWCA Civ 1469, Black LJ said of The "Silver Fir":
"It is of note that this was an arbitration between two foreign corporations and the Court of Appeal were fortified in their conclusion by the way in which matters were dealt with in commercial arbitrations elsewhere in Europe."
The present case
"misappropriated funds from [Fi Call], … misconducted the Company's business in various ways, … failed to keep proper books and records and to supply all the books and records to [Global], and … blocked the holding of board meetings to discuss and try to resolve such matters."
Matters were said to have been:
"exacerbated by false allegations of criminal conduct that the [Apex Parties] have made about [Global] and its shareholders, alleging falsely that they have used the Company for criminal purposes, and that the [Apex Parties] have threatened to publish to third parties."
It was said that, in the circumstances, the affairs of Fi Call had been conducted in an unfairly prejudicial manner and that it was just and equitable for the company to be wound up.
"…
3.9 forged emails and other documents with a view to making false and scandalous allegations against Mr Abu-Ayshih, Prince Abdulaziz and Prince Mishal with the intention of coercing them and Global Torch into agreeing to a compromise of this litigation by buying Apex's shares at an artificial and inflated value;
3.10 procured the decommissioning of [Fi Call's] servers with the intention of preventing the Global Torch Parties from proving their case that disputed emails have been forged thus placing the Apex Parties in breach of their disclosure obligations in this case … ;
…
3.16 threatened to expose Prince Abdulaziz and the Global Torch Parties to severe public embarrassment and distress with the intention of causing him to buy out Apex's shareholding in the Company."
In contrast, the Apex Parties' reply concludes that:
"The conduct of Global Torch, Mr Abu-Ayshih, Prince Abdulaziz, and Prince Mishal has caused Apex justifiably to lose trust and confidence (and has been the cause of the breakdown in trust and confidence) and has caused detriment to [Fi Call] and the destruction of its business (in particular by reason of carrying out unlawful activity)."
"the Court can and should investigate the reasons why the relationship between the parties broke down and should have regard to those reasons when determining what (if any) relief should be granted under the Apex Petition and/or Global Torch Petition."
Other matters
Conclusion